Pakistan Journal of Applied Economics

21-46

Authors: S. Akbar ZAIDI*

For nearly two decades. the International Monetary Fund and the World Bank have been implementing stabilization and structural adjustment programmes in underdeveloped countries. These policies have focused principally on attempts to improve balance of payments. cut inflation. reduce the budget deficit. and ensure increased economic growth. Institutional and structural arrangements within the economy are also transformed so that the package can be implemented in the appropriate conditions. The results of the structural adjustment programme are mixed: some countries have shown growth. others have not; for the most part. the budget deficits have not been adequately cut; many programmes have been outright failures with disastrous consequences. There is almost complete agreement that the social welfare and human repercussions of the structural adjustment programme have been all too severe. Pakistan has adhered to a structural adjustment programme since 1981 . The central argument of this paper is that Pakistan's economy is in fairly good shape and does not need an IMF/World Bank sponsored structural adjustment programme. Pakistan does not suffer from the ailments and afflictions which a large number of countries. who have requested and followed structural adjustment programmes. do. The economy has grown markedly in the past. and can continue to show growth. development. and progress. without structural adjustment programmes. However. reforms and better management are needed. The paper concludes with an attempt to understand why our governments and our intellectual elite fail to question and evaluate the agendas set from abroad.

47-75

Authors: Hafiz A. Pasha & M. Asif Iqbal*

Macro economic imbalances in Pakistan, caused by the burgeoning budget deficit and a large trade deficit, have created strong pressures for stabilization and structural adjustment involving wide ranging reforms in different sectors of the economy. Given downward rigidities in public expenditure, resulting from the growth in defence and debt servicing liabilities, it has become essential to reduce the budget deficit primarily by action on the revenue side. Following the largest ever budget deficit in 1990-91, the newly inducted government constituted a Tax Reforms Committee (TRC) to study the problems in the taxation system and to make recommendations for improvement. The Committee submitted its report in early 1991. Most of its proposals were accepted by the government. The Resource Mobilization and Tax Reforms Commission (RMTRC) was constituted to implement the recommendations of the TRC and to contribute directly to the budget making process. Over two years have elapsed since setting up of the RMTRC and three budgets of 1991, 1992 and 1993 respectively have been announced incorporating significant changes in the taxation system. However, taxation reforms remain one of the least publicized areas of reforms as compared, for example, to steps taken towards liberalization, privatization and deregulation of the economy. This paper attempts to identify the major tax reforms that have occurred in recent years and evaluate them from the viewpoint of impact on revenue and the efficiency and equity aspects of taxation .

117-126

Authors: Riaz Riazuddin

The objective of this paper is to evaluate the trade policy of the' caretaker government. This policy proposes a comprehensive tariff reform to be implemented from the fiscal year 1994-95. Main features [Government of Pakistan, (1993)] of this tariff reform package are as follows: 1.Maximum tarifflevels will be set at only 35 or 50 per cent with six slabs of 10,15,25, 35,45 and 50 per cent. Existing tariff rates will apply to motor vehicles, alcoholic beverages, POL, wheat, fertilizers, pesticides and life savings drugs. 2. Tariff reduction will be phased in gradually over a three year period. 3. Many concessions and exemptions present in the existing tariff regime will be withdrawn gradually. 4. Tariff structure will represent a cascading of nominal tariff with progressive stages of manufacturing, Locally produced goods will be subjected to higher tariff rates compared to goods not produced domestically. 5. Tariffs on machinery and equipment will be 10 per cent unless this machinery is produced locally. 6. High priority domestic industries (such as engineering and chemicals) will receive nominal protection of 50 per cent. 7. Raw materials and intennediate goods predominantly used in the production of exports would be subjected to zero rate of duty. 8. Existing import licence fee, iqra surcharge and flood relief surcharge. will be merged with the statutory tariff rates.